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CONTENTS
1.0 Introduction.......................................................................................................................2
2.0 Company Profile: Boeing.................................................................................................2
2.1 Company background.......................................................................................................2
2.2 Vision and Mission...........................................................................................................3
2.3 SWOT Analysis................................................................................................................3
2.4 PEST Analysis..................................................................................................................5
3.0 Boeings Ratio Analysis.......................................................................................................6
4.0 Critical Analysis of Boeings performance with regards to its internal and external
analysis.......................................................................................................................................7
5.0 Recommendations................................................................................................................8
6.0 Conclusion............................................................................................................................9
7.0 References............................................................................................................................9
8.0 Appendix............................................................................................................................14

LIST

OF

FIGURES

Figure 1: Boeings Global Operators.........................................................................................3

LIST

OF

APPENDENCES

Appendix 1: Boeings SWOT Analysis....................................................................................14

Appendix 2: Boeings PEST Analysis......................................................................................14

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1.0 INTRODUCTION
Financial management is an essential element of good corporate governance and dorms part
of the firm foundations of an organization, underpinning service quality and improvement on
the basis of accountability to stakeholders for the stewardship and use of resources in todays
world (Audit Comission, 2005). It can be said that, financial management is about managing
performance and achieving an organizations strategic objectives, as much as about managing
money. The essential objective of financial management can be categorized into two (2)
broad functional categories; i) recurring finance functions and ii) non-recurring or episodic
finance functions (Rasheed T., 2013).
This report is divided into three (3) parts. The first part consists of a critical evaluation of the
internal and external business environment of Boeing, this will aid to indentifying to what
extent Boeing is strategically fir with its current business environment and its ability to
perform. With respect to prospective creditors and investors, the second part of this report
provides an analysis of different financial ratios in regards to Boeing. Finally, the third part of
this report provides recommendations to creditors and investors pertaining to profitability of
investments in the Boeing Company as well as recommendations pertaining to the future
sustainability of the Boeing Company.

2.0 COMPANY PROFILE: BOEING

2.1 COMPANY

BACKGROUND

Founded by William E. Boeing in 1961, Seattle, the Boeing company has become the world
largest aerospace company and leading manufacturer of commercial jetliners including
defence, space and security systems (Boeing, 2016). As of present, Boeing is operating in 150
countries (figure 1) with 22,000 suppliers and 165,000 most diverse, innovative, and talented
workforce having advanced education and substantial experience in the aerospace industry
(Boeing, 2016). Boeing commercial airplanes and Boeing defence, space and security are the
two (2) systematic business units of the organization where the products and modified
services are based on providing commercial and military aircrafts, satellites, weapons,
electronic and defence systems, launch systems, advanced information and communication
systems, and performance-based logistics and training (Boeing, 2014).

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FIGURE 1: BOEINGS GLOBAL OPERATORS

Source: (Boeing, 2016)

2.2 VISION

AND

MISSION

The core aim of Boeing leadership is to focus on the execution today and into the future
(Boeing Media, 2016) which directly addresses the vision of the company which is based on
people working together as a global enterprise for aerospace industry leadership (Boeing,
2016). Boeings mission is a combination of vision, values, and business imperatives that the
company believes will help them maintain the Boeing tradition of innovation, imagination,
and aspiration into the future. With this said, Boeings mission statement is We are
constantly re-examining our capabilities and processes to ensure that our company is as
strong and vital as our heritage. In fact, our culture mirrors the heritage of aviation itself,
built on a foundation of innovation, aspiration and imagination (Barbara F., 2015).

2.3 SWOT A NALYSIS

SWOT analysis assists an organization to conduct strategic planning. This type of analysis is
critical in terms of analysing internal strengths and weaknesses of the organization as well as
to identify potential opportunities and threats in the external environment (Edward S., 2014;
Thomson and Martin, 2010). Boeings SWOT analysis is based on evaluating the companys
strengths, weaknesses, opportunities, and threats as follows. A summary of Boeings SWOT
analysis can be found in appendix 1.
Strengths: One of the major strengths of Boeing is their supply chain innovation. By
outsourcing seventy (70) percent of the components of their aircrafts (rather than building the
entire aircraft on its own) the company is able to reduce the inventory and final assembly
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time from thirty (30) to three (3) days (Business Teacher, 2016). In addition, Boeing is paying
deep attention on Research and Development activities in terms of developing new products
in order to satisfy customer needs (You Sigma, 2016). The strong association with Federal
Government and large contracts with NASA and US air Force is giving n edge to Boeing in
establishing a strong position (Charlie C., 2005).
Weaknesses: A major weakness of Boeing is that the company has failed to meet deadlines
in delivering commercial aircrafts to its customers. In the past, many deliveries have been
delayed wither due to lack of engineering services or delay from the suppliers (The
Economist, 2011). This has resulted to the market share of Boeing shifting towards Airbus
due to the delay problem (Sascha M., 2008). In addition, with the traditional model of
manufacturing the parts with American vendors, Boeing had a great control over its supply
chain. On the other hand, in the new unconventional model of outsourcing, the control has
shifted in the hands of suppliers, leading to a higher level of risk and possible ambiguity
between Boeing and its suppliers (Business Teacher, 2016).
Opportunity: A major opportunity for Boeing is the demand for point-to-point routes. The
creation of the Boeing 787 has the ability to make long haul flights, with no lay overs. This
is particularly of interest to most of the international travellers as well as the low cost airlines
which uses point to point routes in order to reduce the cost (Business Teacher, 2016). The
financial crisis of 2008 also brought many acquisition opportunities for the company in
expanding the companys operations in the area of supply chain and logistic. The contract of
Global Airline Inventory Network between Boeing and the British airways was also the result
of such opportunities (Boeing, 2016).
Threats: A major threat for Boeing is the deceleration in the commercial jet market. After the
9/11 attack, the airline industry was hit the hardest ad both Boeing as well as Airbus incurred
losses in revenue post the 2001 attack (Business Teacher, 2016). Among all existing
competitors, Airbus is the most obvious competitor for Boeing in terms of commercial
airplanes. In addition, Boeing may face the threat of a new entrant from China as Chineses
government is planning to launch commercial airplanes in 2020 (Clay D., 2010).

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2.4 PEST ANALYSIS

The pest analysis is the most common approach for considering the external business
environment (Abhishek G., 2013). These factors are crucial within the airline industry along
with other industries as they may have strong impacts on the airline business. The summary
of the key findings of Boeings PEST analysis can be observed in appendix 2.
Political Factors: Boeing has deep relations and strong agreements with US Government
and Federal Aviation Administration (FAA), so the policies of the US government may be a
major driving force in accepting new orders of aircrafts. Similarly, the political intervention
may also affect the sales of the company, for example restrictions of selling specific
equipments or airplanes to particular countries like Iran, Iraq, Afghanistan and Pakistan. But
on the other hand, the political policies may support the company as well like trading of large
commercial jetliners has been tariff free since 1979 (GATT, 1994) and Open Skies
agreement of US government with other countries (US Department of State, 2011).
Economic Factors: With respect to the airline industry, subsidy and fuel prices are very
important to Boeing for their daily transactions in terms of cost of capital. The debate/dispute
between Airbus and Boeing on unfair subsidies was the centre of attention in 2010 which was
settled through WTO agreement (Julian B., and Barbara L., 2011). Similarly, an increase in
fuel costs, environmental restrictions, high security equipment due to terrorism threat, and
insurance costs are becoming more vital for Boeing in the near future. According to John C.
(2002), he identified that recent recession has caused to decrease the aircraft prices by twenty
(20) percent and several airline companies have already closed global tourism industry.
Social Factors: The social factors primarily deal with cultural factors which are very
important to Boeing because the company is operating in multinational environment globally.
Boeing needs to consider social factors which may affect the demand and sale of the aircrafts
in the future; for example, changing needs and demands of the customers due to an increase
in the population growth rate (Business Teacher, 2016). Also, the Anti-US policy of US
government is also affecting the sale of Boeing especially in West Asia which can be a highly
profitable market for the company.

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Technological Factors: The usage of more carbon composites in the manufacture of Boeing
aircrafts will make the aircraft more fuel-efficient. Greater fuel efficiency will enable the
aircraft to fly in a longer distances without refuelling (Business Teacher, 2016). This new
technology has led to more orders for Boeing.

3.0 BOEINGS RATIO ANALYSIS

To obtain a better understanding of the success or failure of the Boeing Company, one can
analyze various liquidity, solvency, and profitability ratios. The first two types of ratios can
be useful for individuals deciding whether to loan money to the company. Liquidity ratios
measure a business ability to meet the payment obligations by comparing the cash and near
cash with payment obligations (Qasim S., and Ramiz R., 2011). Solvency ratios are used to
evaluate a companys ability to pay its bills in the long run (Kajananthan R., and Velnampy
T., 2014). Profitability ratios measure the overall performance of a firm and its efficiency in
managing assets, liabilities, and equity (Florenz T., 2012).
For the prospective short-term creditor, various liquidity ratios can be examined and
compared to competitors values, to get a feel for Boeings ability to pay back maturing loans
and be ready for sudden cash needs. The most basic liquidity comparison is a calculation of
Boeing's working capital, which is simply the difference between the company's current
assets and current liabilities (Corey C., Sharon C., and Keith J., 2013). Current assets include
cash and other assets which can most quickly be turned into cash, called liquid assets. Current
liabilities are those which are expected to be paid back within the year or operating cycle of
the company. Boeing's working capital for 2015 was $-5.7 billion (CSI Market, 2016),
indicating that short-term creditors are less likely to be paid, although working capital isn't
necessarily a dependable indicator of liquidity.
The prospective long-term creditor can utilize various solvency ratios to determine the longterm survivability of Boeing. A calculation useful for determining solvency is the free cash
flow calculation, which provides insight into Boeing's cash-generating ability, describing the
cash remaining from business operations after adjustments for capital expenditures and
dividends have been made. In 2015, Boeing's free cash flow was $1.83 billion (YCharts,
2016). Combining the low numbers for Boeing's time interest earned ratio and free cash flow,
with its relatively large debt to total assets ratio, and relatively low cash debt coverage ratio,

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one should be left with the impression that the Boeing Company may not be a good choice
for long-term creditors.
There are also several ratios which help determine the profitability of Boeing for
stockholders. Two more closely related ratios are the payout ratio, and the return on common
stockholder's equity ratio, both useful for measuring corporate performance. The payout ratio
measures the percentage of earnings distributed as dividends to stockholders. It is calculated
by dividing amount of cash dividends declared on common stock by the company's net
income. For Boeing in 2013, this was 34.6%, higher than the industry average of 30.4%
(YCharts, 2016; Nasdaq, 2016). The return on common stockholder's equity ratio measures
profitability from a stockholder's viewpoint. It shows the translation from common stock
investment into net income earned, and is calculated by dividing the net income less preferred
stock dividends by the average common stockholders' equity.

4.0 CRITICAL ANALYSIS OF BOEINGS PERFORMANCE WITH

REGARDS TO ITS INTERNAL AND EXTERNAL ANALYSIS.
In order to recover the market shrink after 9/11 attacks and also compete with Airbus, Boeing
introduced a new aircraft known as the Boeing 787 Dreamliner which has been known to be
one of the best commercial airplanes of Boeing Company. After the initial success, Boeing is
losing its market share once again by experiencing delays in delivering particular products to
its customers (Narasimha L., and Ehsan E., 2012). In addition, these delays are resulting in
huge extra costs for the company.
Based on Boeings SWOT and PEST analysis, it is evident from various sources that numbers
of factors are causing delays in development of a particular airplane model. Narasimha and
Ehsan (2012) found that Boeing is currently struggling with supply chain problems as well as
Boeings Dreamliner to potential customers can be delayed by two years due to engine
problems. Peter (2011) indentified that Boeing has lost control over development activities on
account that the company outsourced both the design and the manufacturing of Dreamliner.
Based on the Boeings SWOT analysis (Appendix 1), the improvement of Boeings Supply
Chain Information System (SCIS) is needed based on Boeings recent weak performance of
the company in commercial airplane segment; in addition to the company also facing delays
due to ineffective supply chain management approach. Furthermore, on account of the deep
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impacts of Great East Japan earthquake, Boeing has a long-term plan to establish supplier
relationships with China (Xinhua, 2011). With Boeings improvement in its Supply Chain
Information System, Boeing has been able to develop relationships with new suppliers in the
Asian markets.
The key issue of competency gap between Boeings vision and strategies due to supply chain
problems was highlighted (Rob W., 2011). Based on Boeings PEST analysis, the
reengineering process of Supply Chain Information System using people, processes, and
technology will provide the opportunity to Boeing to establish and retain strong relationship
with suppliers with effective control. Boeings highly unionised company in the airline
industry and companys internal and external resources and core competencies support them
to implement the improvement strategy of SCIS. Nevertheless, the current economic
condition and cost overrun of 787 Dreamliner may hinder the companys decision in adapting
this strategy.

5.0 RECOMMENDATIONS
Boeing must implement a consultative selling approach and provide services that move
toward a partnership relationship with customers. This involves altering the business plan to
fir the demands of the environment. Additionally, Boeing needs to emphasize the importance
of communicating the value of e-Enabling (the power of integrated information and
communications systems) to their customers.
Based on Boeings SWOT analysis, it is discovered that the organization faces supply chain
issues due to lack of communication strategies (Sanders P., 2010). The SCIS strategy (if
implemented by Boeing) will facilitate the organization by filling the communication gap
between the company and their suppliers by using ERP software. However, the total cost of
the Boeing 787 Dreamliner has already increased by 120% as compared to its original budget
(Peter C., 2011). The outcome of using this strategy will result in avoiding any further delays
which will be beneficial for the company in terms of cost-saving and increasing shareholders
value.
People have crucial roles in implementing this strategy. In order to apply SCIS strategy
effectively, Boeing may need to change its business and functional level structures. At the
business level, staff will implement the strategy by considering relevant actions needed to be
taken to improve current Supply Chain Information System. For example, acquiring more
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licences of ERP or to customize the existing ERP packages to meet the required criteria. At
the functional level, staff will ensure that every function must coordinate with other in order
to address strategic objectives.

6.0 CONCLUSION
Within this report, the internal and external business environments of Boeing were evaluated
critically to identify the relationship between Boeings business environment and the
companys performance. As a result of strategic analysis of Boeing, it can be concluded that
the company is currently facing the problem of delays in developing the Boeing 787
Dreamliner. The delay issue has been caused by supply chain management problems on
account of outsourcing both design and the manufacturing services in making the 787
aircraft. In order to minimise or eliminate the delay factor, it was recommended that the best
strategy is based on improving Boeings current Supply Chain Information System (SCIS)
using, people, process, and technology strategy to develop effective control systems to
manage supplier relationships to overcome deadly issues.
While only the payout ratio is larger than average, the other profitability ratios are not much
lower than the average for the industry, indicating that long-term investment would be a safe
risk to take, and a possibly profitable one, considering Boeing's plans, including the release of
the 787 and their Connectix by Boeing internet broadband service.

7.0 REFERENCES
Abhishek Gupta (2013) 'Environment & PEST Analysis: An Approach to External Business
Environment', International Journal of Modern Social Sciences,, 2(1), pp. 34-43.

Audit Commission (2005) World class financial management: A discussion paper, Available
at: https://www.bipsolutions.com/docstore/pdf/12093.pdf (Accessed: 15 January 2016).

Barbara Farfan (2015) Company Mission Statements - Complete List of Worlds Largest
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Retail Missions, Available at:

http://retailindustry.about.com/od/retailbestpractices/ig/Company-MissionStatements/Boeing-Mission-Statement---Vision.htm (Accessed: 16 January 2016).

Boeing (2014) The Boeing Company: Environment Report, Available at:

http://www.boeing.com/aboutus/environment/environment_report_14/2014_environment_rep
ort.pdf (Accessed: 16 January 2016).

Boeing (2016) Boeing And British Airways Launch Global Airline Inventory Network,
Available at: http://boeing.mediaroom.com/1999-09-22-Boeing-And-British-AirwaysLaunch-Global-Airline-Inventory-Network (Accessed: 18 January 2016).

Boeing (2016) Boeing Commercial Airplanes , Available at:

http://boeing.mediaroom.com/index.php?s=20295&item=1047 (Accessed: 16 January 2016).

Boeing (2016) Global Reach, Local Focus, Available at: http://www.boeing.com/global/

(Accessed: 15 January 2016).

Boeing (2016) OUR COMPANY, Available at: http://www.boeing.com/company/ (Accessed:

15 January 2016).

Boeing (2016) OUR VISION, Available at: http://www.boeing.com/principles/vision.page

(Accessed: 16 January 2016).

Business Teacher (2016) SWOT Analysis Of Boeing, Available at:

http://www.businessteacher.org.uk/guides/business/swot/swot-analysis-of-boeing.php#content
(Accessed: 17 January 2016).

Charlie Cray (2005) Boeing, Available at: http://www.corpwatch.org/section.php?id=10

(Accessed: 17 January 2016).
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Clay Dillow (2010) CHINA PLANS COMMERCIAL JET, CHALLENGER TO BOEING AND
AIRBUS, Available at: http://www.popsci.com/technology/article/2010-11/china-unveils-fullsize-models-its-planned-commercial-jet-challenger-boeing-and-airbus (Accessed: 18 January
2016).

COREY S. CAGLE, SHARON N. CAMPBELL and KEITH T. JONES (2013) 'Analyzing

liquidity using the cash conversion cycle, Journal of Accountancy, 3(2),

CSI Market (2016) Boeing Company, Available at:

http://csimarket.com/stocks/singleFinancialStrength.php?code=BA&Wcr (Accessed: 20
January 2016).

Edward Sallis (2014) Total Quality Management in Education, 3rd edn., London: Routledge.

Florenz C. Tugas (2012) 'A Comparative Analysis of the Financial Ratios of Listed Firms
Belonging to the Education Subsector in the Philippines for the Years 2009-2011 ',
International Journal of Business and Social Science , 3(21), pp. 173-190.

JOHN CHERIAN (2002) 'The politics of aircraft sales', Frontline, 19(21),

John L. Thompson, Frank Martin (2010) Strategic Management: Awareness & Change, 6th
edn., United Kingdom: Cengage Learning EMEA.

JULIANE VON REPPERT-BISMARCK AND BARBARA LEWIS (2011) WTO Airbus,

Boeing disputes: what next?, Available at: http://www.reuters.com/article/uk-qa-wto-airbusboeing-idUSLNE74U01H20110531 (Accessed: 19 January 2016).

Kajananthan R., and Velnampy T. (2014) 'Liquidity, Solvency and Profitability Analysis

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Using Cash Flow Ratios and Traditional Ratios: The Telecommunication Sector in Sri Lanka',
Research Journal of Finance and Accounting , 5(23), pp. 163-169.

Narasimha Lamba and Ehsan Elahi (2012) When Supply Chain Strategy Does not Match
Supply Chain Capabilities: Lessons that can be Learnt from the Supply Chain of Boeing 787,
Available at: http://www.igi-global.com/viewtitlesample.aspx?
id=62165&ptid=35337&t=when+supply+chain+strategy+does+not+match+supply+chain
+capabilities%3a+lessons+that+can+be+learnt+from+the+supply+chain+of+boeing+787
(Accessed: 21 January 2016).

Nasdaq (2016) Boeing, Available at: http://www.nasdaq.com/symbol/ba/stock-report,

%20https://ycharts.com/companies/BA/dividend (Accessed: 21 January 2016).

Peter Cohan (2011) Boeing's Dreamliner Delays: Outsourcing Goes Too Far, Available at:
http://www.dailyfinance.com/2011/01/21/boeing-dreamliner-delays-outsourcing-goes-too-far/
(Accessed: 21 January 2016).

PETER SANDERS (2010) Boeing Has New Delay for Dreamliner, Available at:
http://www.wsj.com/articles/SB10001424052748703959704575454582232255168
(Accessed: 21 January 2016).

Qasim Saleem and Ramiz Ur Rehman (2011) 'Impacts of liquidity ratios on profitability',
Interdisciplinary Journal of Research in Business , 1(7), pp. 95-98.

RASHEED A. TIAMIYU (2013) POOR ACCOUNTABILITY IN PUBLIC SECTOR AS A

SUSPECT OF THE CLAIM OF INADEQUATE FUNDING OF TERTIARY EDUCATION IN
OYO STATE, NIGERIA. , Available at: http://www.apira2013.org/proceedings/pdfs/K043.pdf
(Accessed: 15 January 2016).

ROB WAUGH (2011) Not just a load of hot air: Dream becomes reality as Boeing's new
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carbon-fibre 787 Dreamliner heralds a new age of air travel , Available at:
http://www.dailymail.co.uk/sciencetech/article-2041863/Boeing-787-Dreamliner-realitycarbon-fibre-plane-delivered-Japan.html (Accessed: 21 January 2016).

Sascha Mayer (2008) Airbus versus Boeing. Strategic Management Report, 2nd edn.,
Munich: GRIN Verlag.

The economist (2011) Blame suppliers for the delays in delivery of Boeing's Nightmareliner,
Available at: http://www.economist.com/node/21528275 (Accessed: 18 January 2016).

U.S Department of State (2016) Open Skies Partners, Available at:

http://www.state.gov/e/eb/rls/othr/ata/114805.htm (Accessed: 19 January 2016).

Xinhua (2011) Boeing to double Chinese procurement by 2015, Available at:

http://news.xinhuanet.com/english2010/business/2011-05/11/c_13870071.htm (Accessed: 21
January 2016).

Ycharts (2016) Boeing Free Cash Flow (Quarterly), Available at:

https://ycharts.com/companies/BA/free_cash_flow (Accessed: 20 January 2016).

YouSigma (2016) Boeing , Available at:

http://yousigma.com/comparativeanalysis/boeing.html (Accessed: 17 January 2016)

8.0 APPENDIX
APPENDIX 1: BOEINGS SWOT ANALYSIS

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Source: (Thomson and Martin, 2010)

APPENDIX 2: BOEINGS PEST ANALYSIS

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